Chapter 9

#7.On February 4 of a particular year, the spot rate for U.S. dollars ($) expressed in euros () was $ 0.7873/.The U.S. interest rate (compounded semiannually) was 5.36 percent, whereas the euro interest rate (compounded semiannually) was 3.11 percent. From a European perspectives, what should be the forward rate of a contract that expires September 4? (Assume that each month is one-twelfth of a year)